The pertinent facts are not disputed. SEIU represents several units of State
of Oregon employees that include temporary employees. SEIU and DAS commenced
collective bargaining concerning those units in June 2000. During the course of
arbitration, SEIU submitted proposals concerning health benefits for the temporary
employees. DAS refused to bargain on the subject of health benefits for the temporary
employees, taking the position that it was a prohibited subject of bargaining.

More specifically, SEIU proposed the following: "Health benefits will be
provided to full-time and part-time temporary employees * * * whether or not provided by
PEBB." (1) DAS responded that the proposal concerning health benefits for temporary
employees was a prohibited subject of bargaining "because the Legislature has expressly
stated that temporary employees cannot participate in [PEBB's] health plans. To require
the Employer to enable temporary employees to participate in [PEBB's] plans would
require the Employer to commit an act that violates the law." SEIU responded with a
proposal that, if DAS were prohibited from providing the health care benefits through
PEBB, then DAS would make contributions to SEIU's Health and Welfare Trust Fund in
specified amounts to be used for provision of health benefits to the temporary employees.
DAS asserted that it could not provide monetary contributions to be used to purchase
health benefits for the temporary employees because no law specifically authorized such
an expenditure. DAS took the position that the entire subject was prohibited, regardless
of who provided the benefits.

Because DAS refused to bargain over health benefits for temporary
employees, SEIU filed this unfair labor practice complaint. The matter was heard in May
2001, and ERB entered an order the following month determining that DAS violated the
Public Employee Collective Bargaining Act (PECBA) when it refused to bargain over the
subject of health care benefits for temporary employees. DAS timely filed a petition for
judicial review of ERB's order in this court.

It is an unfair labor practice for a public employer to refuse "to bargain
collectively in good faith with the exclusive representative" of unionized employees.
ORS 243.672(1)(e). ORS 243.650 provides several relevant definitions:

"(4) 'Collective bargaining' means the performance of the mutual
obligation of a public employer and the representative of its employees to
meet at reasonable times and confer in good faith with respect to
employment relations for the purpose of negotiations concerning mandatory
subjects of bargaining [as defined in this section] * * *. Nothing in this
subsection shall be construed to prohibit a public employer and a certified
or recognized representative of its employees from discussing or executing
written agreements regarding matters other than mandatory subjects of
bargaining that are not prohibited by law, so long as there is mutual
agreement of the parties to discuss these matters, which are permissive
subjects of bargaining.

To summarize, those subjects listed within subsection (7)(a) as
"employment relations" are "mandatory" subjects of bargaining under subsection (4), and
public employers are required to bargain on those subjects. The last sentence in
subsection (4) provides that subjects that are not mandatory are permissive and that the
parties to a collective bargaining agreement may, by mutual agreement, include such
permissive subjects in their bargaining, so long as they are "not prohibited by law." ORS
243.650(4).

The statute thus breaks subjects of bargaining into two primary categories:
mandatory and permissive. Any subject that is not mandatory is permissive, with two
limitations: The parties must reach "mutual agreement" in order to address the permissive
subject in collective bargaining, and the permissive subject must not be "prohibited by
law." ORS 243.650(4). As a practical matter, though, it is not disputed that any proposal
that is otherwise prohibited by law is considered a prohibited subject of bargaining,
regardless of whether it might otherwise be described as "mandatory" or "permissive."
See, e.g., Eugene Education Assoc. v. Eugene School Dist. 4J, 91 Or App 78, 754 P2d
580, vacated on other grounds, 306 Or 659, 761 P2d 524 (1988) (union proposal
concerning layoffs based on seniority concerned conditions of employment, but the
employer was not required to bargain over the proposal because it sought to require the
employer to agree to a different method of layoffs from that specifically provided by
statute). Here, the parties agree that employee health insurance generally falls within the
ambit of ORS 243.650(7)(a) because it is an indirect monetary benefit and, thus, is a
mandatory subject of bargaining, at least insofar as it is not prohibited.

ERB rejected DAS's argument, concluding that nothing in SEIU's proposal
would require DAS to act contrary to any provision of law:

"SEIU's proposal would not require the State to provide insurance or
premium contributions for temporary employees through or to PEBB. SEIU
acknowledges that temporary employees are not covered by PEBB statutes.
Rather, SEIU's proposal would require the State to pay for alternative
insurance coverage for such employees and make a specific contribution for
that purpose to the SEIU Health and Welfare Trust. There is nothing about
this proposal that violates any provision of the PEBB statutes. Likewise,
there is nothing in the proposal that would require the State to act contrary
to any provision in the PEBB statute[s]. * * *

"The State urges us to read the PEBB statutes as providing the PEBB
with exclusive authority over health care benefits for all State employees
even if the employees are ineligible for PEBB coverage. We find nothing
in the PEBB statutes that suggest[s] such a pervasive intent.

"* * * * *

"The State also contends ORS 278.405 strips DAS of any authority
over health care benefits. We disagree. ORS 278.405 grants DAS the
general authority to direct and manage all State risk management and
insurance programs except those programs under PEBB's jurisdiction.
Since temporary employees are excluded from PEBB coverage, the general
grant given to DAS pursuant to ORS 278.405 authorizes--rather than
restricts--DAS's authority to negotiate insurance benefits for temporary
employees."

(Emphasis in original.) As explained below, we agree with ERB for two reasons, either
of which is sufficient standing alone to justify ERB's conclusion.

We turn first to the essential premise of DAS's argument--that it has no duty
to bargain over a proposal with which it cannot legally comply. For this proposition,
DAS relies primarily on Eugene Education Assoc., cited above, and Sutherlin Ed. Assn v.
Sch. Dist., 25 Or App 85, 548 P2d 204 (1976). Eugene Education Assoc. concerned a
union proposal that provided for a system of seniority-based layoffs of teachers different
from the system set forth in ORS 342.934. We stated:

"[T]he legislature established a detailed scheme for implementing
reductions in teaching staffs. Almost every provision of [ORS 342.934]
deals with a subject that otherwise might be an appropriate subject of
collective bargaining. We see no indication that the legislature intended
those provisions to be subordinate to PECBA or that they supersede
collective bargaining only if they 'clearly and necessarily' preclude it."

Eugene Education Assoc., 91 Or App at 82. Because the union's proposal "would have
required District to violate the statute," we concluded that "[d]istrict did not need to
bargain over that proposal, or to offer alternatives to it." Id.

By contrast, Sutherlin Ed. Assn concerned a union proposal about how to
deal with disruptive and problem students. 25 Or App at 87. The employer school
district took the position that it could not be required to bargain over that subject because
the school board was required by statute to adopt disciplinary rules that were consistent
with rules promulgated by the State Board of Education. Id. We concluded that "the
local board cannot agree to adopt rules inconsistent with the statewide rules, but we see
no reason why this prevents it from bargaining as to the content of its rules so long as the
rules eventually promulgated are consistent with the statewide rules." Id. at 87-88.

From those cases, we can discern that an employer cannot be required to
bargain over a proposal that proposes something that is directly contrary to a statutory
command, but that an employer is required to bargain over a proposal concerning a
mandatory subject of bargaining, even if there are statutory constraints on the employer
concerning that subject, so long as the end result does not conflict with the statutory
constraints. DAS does not contend otherwise. Rather, it contends that SEIU's proposal
here does, in fact, conflict--at least implicitly--with statutory constraints.

DAS first points out that ORS 243.125(1) requires PEBB to "design
benefits, devise specifications, analyze carrier responses to advertisements for bids and
decide on the award of contracts" concerning benefit plan coverage for eligible
employees. DAS notes that PEBB is the only state agency with express authority to
provide health benefits plans for state employees. DAS further points out that DAS is
required to "direct and manage all * * * insurance programs of state government except
for employee benefit insurance programs as otherwise provided in ORS chapter 243."
ORS 278.405. The employee benefit insurance programs "otherwise provided in ORS
chapter 243" are those provided by PEBB, and may only be provided to "eligible"
employees, which, by definition, excludes temporary employees. ORS 243.105(4). From
those statutes, DAS reasons that it can direct and manage insurance programs other than
employee benefits programs, but that only PEBB can offer employee benefit programs,
and then only to "eligible" employees, and not temporary employees. DAS asserts that,
because it is not authorized to offer employee benefits programs to any employees, and
PEBB is not authorized to offer employee benefits to temporary employees, it follows
that it cannot collectively bargain on the subject of benefits to temporary employees
because it cannot, given those statutory limitations, provide health insurance to the
temporary employees itself or through PEBB.

DAS argues that ERB was incorrect and that the text of ORS 278.405
supports its position that health insurance benefits for temporary employees are a
prohibited subject of bargaining. That statute, as noted, provides in pertinent part that
DAS "shall direct and manage all risk management and insurance programs of state
government except for employee benefit insurance programs as otherwise provided in
ORS chapter 243." DAS argues that "as otherwise provided in ORS chapter 243" does
not modify "employee benefit insurance programs" but, instead, modifies the preceding
phrase "direct and manage all * * * insurance programs." DAS proceeds from that
premise to construct an argument that the legislature must have intended that state
employees not entitled to health insurance through PEBB should not be able to receive
health insurance. We need not explore the nuances of DAS's statutory construction
argument, because its underlying syntactical premise is incorrect under the "doctrine of
the last antecedent." DAS asserts that the phrase "as otherwise provided in ORS chapter
243" does not modify the phrase that immediately precedes it--"employee benefit
insurance programs." The doctrine of the last antecedent, however, provides:

"'Referential and qualifying words and phrases, where no contrary
intention appears, refer solely to the last antecedent. The last antecedent is
"the last word, phrase, or clause that can be made an antecedent without
impairing the meaning of the sentence." Thus a proviso usually is
construed to apply to the provision or clause immediately preceding it. * * *

"'Evidence that a qualifying phrase is supposed to apply to all
antecedents instead of only to the immediately preceding one may be found
in the fact that it is separated from the antecedents by a comma.'"

Further, even assuming, for the sake of argument, that we agreed that DAS
cannot "direct and manage" any employee benefit insurance program because of ORS
278.405, and that it cannot offer such insurance to temporary employees through PEBB
because PEBB can provide such insurance only to "eligible" employees, that still would
not necessarily lead to the conclusion that bargaining over contributions to SEIU's Health
and Welfare Trust is prohibited. DAS takes the position that, because it cannot provide
insurance to temporary employees itself or through PEBB, it also cannot contribute to
SEIU's Health and Welfare Trust Fund if those funds are to be used to provide health
insurance benefits to the temporary employees. The reason, DAS posits, is that "it is
axiomatic that what the government cannot do directly it cannot do indirectly." That
axiom, however, requires some examination before it can be broadly interpreted to mean
that a government agency may never contract for, or provide funds for, a service that it
lacks statutory authority to provide directly.

The only case DAS cites for the proposition that a government cannot do
indirectly anything that it cannot do directly is Coos County v. State of Oregon, 303 Or
173, 734 P2d 1348 (1987). The legal issues presented in that case, however, bear no
similarity to the legal issue presented here, nor does the rule of law discussed there have
any bearing on this case. The issue in Coos County was whether the county was estopped
from claiming title to a piece of land based on a tax lien foreclosure. Id. at 175. At issue
was a piece of land on which a county tax lien had attached in early 1930. The owner
subsequently mortgaged the land to a state agency. Id. The county foreclosed the tax lien
in 1935, naming the state agency as a defendant, but the agency did not appear. Id. at
176. The property was offered at a foreclosure sale but was not sold, so it was awarded
by default to the county for the amount of unpaid taxes. Although the transfer of the
property was properly recorded, the transfer was not reflected in the tax records of the
county, and the county continued to assess the original owners for taxes between 1936
and 1940. Id. In 1940, the original owners deeded the property to the state agency, which
released the mortgage. Id. The state recorded the deed in 1940. The county then
proceeded to assess forest patrol levies against the state for the property for more than 40
years. Id. In 1982, the state attempted to sell the land to a private company. A title
search disclosed the county's ownership of the property. The county then sued the state
for ejectment.

The pertinent issue in that case was whether the county was estopped from
claiming an ownership interest in the land in light of its representations for over 40 years
that the state had owned (and owed taxes on) the land. Id. at 180. After noting the
significant limitations on estoppel against government entities, the court rejected the
state's argument that the county's collection of forest patrol levies on the property "made
by county employes within the scope of their statutory authority [were] sufficient to bind
the county." Id. at 182. The court then announced the general rule that "the erroneous
levy and collection of taxes on property will not estop a government body from asserting
title to the property assessed." Id. at 183. In support of that proposition, the court cited a
Kentucky case that explained the rule:

"'The reason for the rule is that the officers charged with the duty of
assessing property and collecting the taxes thereon are without authority to
convey public property, and what they cannot do directly they cannot do by
indirection.'"

It is true that we have applied a variation on that rule of law in the context
of contracts rather than limiting it to estoppel. In Does 1-7 v. State of Oregon, 164 Or
App 543, 560, 993 P2d 822 (1999), rev den, 330 Or 138 (2000), the plaintiffs alleged that
the state was bound by promises of confidentiality of birth records made by individuals
who the plaintiffs claimed were acting as agents for the state. We rejected that argument,
noting that, even if the representations had been made by agents of the state, "agents may
not bind the state to any arrangement that contravenes the statutes." Id. We went on to
state that if "agents were without authority to make such a promise, then it is a promise
that cannot be enforced." Id. For that proposition, we cited Harsh Investment Corp. v.
State Housing Division, 88 Or App 151, 744 P2d 588 (1987), rev den, 305 Or 273 (1988),
which, in turn had held that "[t]hose who deal with state officers must know the extent of
their authority and cannot claim by estoppel what they could not receive by contract."

That line of cases concerns situations in which an agent of the state makes
promises without authority to do so and in contravention of statute. Those cases do not
support the broad proposition that a state agency may not contract for services that it lacks
specific statutory authority to provide directly. An agency has "only such power and
authority as has been conferred upon it by its organic legislation." Ochoco Const. v.
DLCD, 295 Or 422, 426, 667 P2d 499 (1983). An agency's power, however, "includes
that expressly conferred by statute as well as such implied power as is necessary to carry
out the power expressly granted." Id. (emphasis added).

DAS has wide-ranging authority. ORS 184.305 provides, in part:

"The Oregon Department of Administrative Services is created. The
purpose of the Oregon Department of Administrative Services is to improve
the efficient and effective use of state resources through the provision of:

"(1) Government infrastructure services that can best be provided
centrally, including but not limited to purchasing, risk management,
facilities management, surplus property and motor fleet;

Given the breadth of DAS's charges, it is difficult to conceive that the legislature would
not intend DAS to be able to contract for any services that it did not have specific
authority to provide itself. In fact, ORS 279.712(1), which pertains to public contracting
and purchasing, contains no hint of such a limitation on DAS, but gives DAS the broad
authority to "purchase or otherwise provide for the acquisition or furnishing of all
supplies, materials, equipment and services * * * required by state agencies[.]" (Emphasis
added.) Similarly, "[a]ll collective bargaining between the state and its agencies and any
certified or recognized exclusive employee representative of classified employees shall be
under the direction and supervision of [DAS]." ORS 240.321(1). Represented employees
"shall have all aspects of their wages, hours and other terms and conditions of
employment determined by collective bargaining agreements," with the exception of
employee recruitment and selection. ORS 240.321(2) (emphasis added).

DAS has broad authority, not only to purchase equipment and services, but
also to negotiate collective bargaining agreements. With that broad authority, it has the
implied powers necessary to carry out its designated functions. Ochoco Const., 295 Or at
426. In order to conclude that negotiation of health care benefits with SEIU is a
prohibited subject of bargaining, we would have to conclude that health care benefits for
temporary employees is not included within "all aspects of [employee] wages, hours and
other terms and conditions of employment" because inclusion of that subject within that
definition would conflict with other substantive provisions of law. As noted above,
however, ORS 278.405 cannot be interpreted as DAS suggests to provide such a
prohibition, and DAS points to no other statutory provision to support its proposition that
health insurance benefits for temporary employees is a prohibited subject of bargaining.

DAS posits that our decision in OPEU v. Dept. of Admin. Services, 173 Or
App 432, 22 P3d 251 (2001), supports its position that health benefits for temporary
employees are a prohibited subject of bargaining. We disagree. The issue in that case
was whether ERB erred in determining that temporary employees could be included in
bargaining units that included nontemporary employees. Id. at 434. In determining
whether such a bargaining unit was appropriate, we examined the difference between
temporary and nontemporary employees. We stated:

"In contrast to temporary employees, regular-status employees
generally may be hired only through open competition. See ORS 240.306.
In addition, temporary employment may be terminated at will, but regular-status employment may be terminated only for cause or 'lack of work,
curtailment of funds, or reorganization requiring a reduction in force.' ORS
240.316(2). Temporary employees also are not entitled to health benefits,
whereas regular-status employees are entitled to health benefits. See ORS
243.135 (entitling 'eligible employees' to health benefit plans) and
243.105(4)(b)(D) (excluding temporary employees from definition of
'eligible employees')."

Id. at 438 (emphasis added).

That case does not stand for the proposition that health benefits for
temporary employees are a prohibited subject of bargaining. It means only what it says:
Temporary employees are not entitled to health benefits under the quoted statutes. That
temporary employees do not enjoy the automatic entitlement to health benefits enjoyed by
regular-status employees does not mean that their representative cannot bargain for any
health benefits for temporary employees. Nothing in our opinion today conflicts with our
observation in OPEU that temporary state employees lack a statutory entitlement to health
benefits; we hold only that the subject of health benefits for temporary employees is not a
prohibited subject of bargaining.

I dissent because I conclude that DAS may not provide health care benefits
to temporary state employees. Accordingly, it committed no unfair labor practice when it
refused to bargain over health benefits for them.

ORS 243.135(1) requires PEBB to contract for health benefits plans for
eligible state employees. Temporary state employees are expressly not "eligible" for such
benefits under ORS 243.105(4). However, the majority says that DAS may provide such
benefits under a broad general grant of authority to "direct and manage all * * * insurance
programs of state government except for employee benefit insurance programs as
otherwise provided in ORS chapter 243." ORS 278.405 (emphasis added). Despite the
express statutory prohibition of DAS to direct and manage health benefit programs, the
majority concludes that DAS must nevertheless bargain over whether it shall make
contributions to SEIU so that the union may purchase health benefit insurance for
temporary employees.

In my view, the legislature has made a determination that prohibits DAS
from either directly or indirectly funding health benefit insurance for temporary state
employees. The rights of both regular and temporary state employees to receive health
insurance have been fully addressed. Regular employees are to be provided that
insurance and temporary employees are not. They are ineligible under the only statute
that expressly addresses health insurance for state employees. PEBB may not provide
those benefits to temporaries. In the absence of another statute expressly allowing for the
provision of health benefits to temporary state employees, the most reasonable conclusion
is that the legislature has made a complete expression of legislative policy. It has made a
policy decision that the state will not provide health benefits to temporary state
employees.

SEIU and the majority believe that DAS's authority to fund the insurance at
issue derives from its authority to "direct and manage" insurance programs. ORS
278.405. But DAS is precluded by statute from directing and managing health benefit
programs provided in ORS chapter 243. It is a basic rule of statutory construction that a
specific expression of statutory intent controls over a more general statute that is
inconsistent with it. PGE v. Bureau of Labor and Industries, 317 Or 606, 611, 859 P2d
1143 (1993). It is virtually certain that, having once declared temporary employees
ineligible for health benefit insurance, the legislature would not intend to permit DAS to
fund such a program.

Whether health benefit insurance should be provided for temporary
employees remains a matter of legislative concern. We should not interfere with the
legislature's policy choice by holding that DAS may be compelled to bargain over the
disputed benefits and may thus be compelled to provide them. The legislature has given
PEBB exclusive authority to provide health benefit insurance for state employees and,
therefore, DAS has no statutory authority to provide or fund health benefit insurance.
Thus, DAS cannot comply with SEIU's proposal, and it did not commit an unfair labor
practice when it refused to bargain.

1. PEBB stands for the Public Employees' Benefit Board. See generally ORS
243.061.

3. The dissent asserts that ORS 278.405 represents an "express statutory
prohibition of DAS to direct and manage health benefit programs." See ___ Or App at
___ (Warren, S. J., dissenting) (slip op at 1). Again, however, that reading does not
acknowledge, and gives no effect to, the statute's "as otherwise provided in ORS chapter
243" language as properly construed in accordance with the "doctrine of the last
antecedent."

4. The legislative history to which DAS refers is from the enactment of ORS
278.405 in 1985. It consists solely of several descriptions of the statute that mention the
exception for employee benefit programs but fail to mention the limitation "as otherwise
provided by ORS chapter 243." ORS 278.405. Legislative history, however, cannot be
used to establish an ambiguity in an otherwise unambiguous statute, Does 1-7, 164 Or
App at 559, much less be used as a reason to "omit what has been inserted" into a statute.
ORS 174.010.